Which of the following is subtracted from GNP when calculating net national product?
a. Interest
b. Capital consumption allowance
c. Rent
d. Indirect business taxes
e. Income tax
Question 2Which of the following can be a valid reason for Canada's GDP exceeding its GNP in 2001?
a. Net factor income from abroad in Canada was negative.
b. Canada's GNP measurements were flawed.
c. Canada's indirect business taxes were exceptionally high.
d. The World Bank underestimated Canada's net exports.
e. Canada's residents received more foreign aid than they could spend.
Question 3Which of the following is true of indirect business taxes?
a. They are included in corporate profits.
b. They are not included in the GDP.
c. They reduce the value of total economic output thereby reducing the value of the GDP.
d. They are collected by business firms that act as agents for the government.
e. They are the same as personal income taxes.
Question 4The purchase of a new machine to replace the one that is worn out is:
a. not included in GDP.
b. included in gross investment.
c. considered a personal consumption expenditure.
d. not included in GNP.
e. an increase in inventories.
Question 5The difference between gross and net investment is referred to as:
a. a personal tax.
b. the income earned but not received.
c. a capital consumption allowance.
d. an indirect business tax.
e. a statistical discrepancy.
Question 6The term capital consumption allowance is defined as:
a. the amount of net interest in an economy each year.
b. the estimated value of depreciation and obsolescence in investment goods.
c. the difference between exports and imports.
d. the disposition of disposable personal income.
e. the difference between earnings not received and receipts not earned.
Question 7Which of the following is included in GDP computation according to the income method?
a. Consumption
b. Profits
c. Investment
d. Government spending
e. Imports
Question 8A reduction in the value of capital goods over time due to their use in production is called:
a. amortization.
b. erosion.
c. consumption.
d. investment.
e. depreciation.
Question 9If C' denotes consumption expenditure, I' denotes investment expenditure, G' denotes government expenditure and X' denotes net exports, then C + I + G + X equals:
a. net national product.
b. disposable personal income.
c. net exports.
d. personal income.
e. gross domestic product.
Question 10The total expenditure on goods and services in a country must be the same as the total income earned from selling goods and services because:
a. the government's annual budget has to balance.
b. net exports in an economy is usually zero.
c. one sector's expenditures are another sector's income.
d. total investment in an economy always equals total saving.
e. the sum of consumption spending and saving is zero.
Question 11The stock of unused goods held by a firm is called a(n):
a. depreciation.
b. supplement.
c. deadweight loss.
d. excess capacity.
e. inventory.
Question 12GDP, according to the income method, is the sum of:
a. wages, rent, interest, and profits.
b. consumption, gross investment, depreciation, and net exports.
c. depreciation, net factor income from abroad, and indirect business taxes.
d. gross investment, wages, profits, rent, and indirect business taxes.
e. consumption, profits, interest, rent, and net exports.
Question 13Bill Gates' recent purchase of a new Rolls-Royce automobile produced in Great Britain will:
a. increase the gross domestic product of the United States.
b. have no effect on either country's GDP.
c. decrease Great Britain's GDP.
d. increase the net export component of U.S. gross domestic product.
e. have to be subtracted from the U.S. GDP.
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